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News September 2012

Washington Watch

Stark Differences Define Political Battle over Medicaid

By Alan M. Schlein

The differences between the Republican vision of Medicaid and the Democratic vision are stark and are among the sharpest issue distinctions between the two parties in the upcoming fall election campaign.

c_stingermed0912_sIf they win the White House and control of Congress in the November elections, Republicans are preparing to dramatically scale back Medicaid, the joint federal-state program that is essential to poor seniors.

Empowered by their interpretation of the June Supreme Court decision on President Obama’s health care law, some Republican governors are already balking at expanding Medicaid to meet the goals of the Affordable Care Act (ACA). Some have begun rolling back coverage saying the program is budget-busting and ineffective.

Meanwhile, Congressional Republicans are developing a complete rewrite of Medicaid’s funding to convert Medicaid into a series of smaller grants to states, hoping to reprise the strategy that worked in the 1990s to reform welfare.

At the same time, Democrats are going in the opposite direction – planning a major expansion of the 47-year-old Medicaid program. Under the ACA, Medicaid would become the foundation for universal health coverage by guaranteeing insurance to all poor Americans for the first time. Medicaid currently serves poor seniors, children and the disabled but excludes most low-income adults.

The differences between the Republican vision of Medicaid and the Democratic vision are stark and are among the sharpest issue distinctions between the two parties in the upcoming fall election campaign.

Former Massachusetts Gov. Mitt Romney, the presumptive GOP presidential nominee, supports turning the Medicaid program into block grants to states. He has said he would cap federal spending, effectively slashing Medicaid funding by more than $1.5 trillion over the next decade – the most sweeping change in the program’s history. One of Romney’s health care advisors, Dr. Scott Gottlieb, has claimed that Medicaid is “worse than no coverage at all,” according to the Los Angeles Times.

House Republicans are hoping to go even further, working to cut about $2 trillion from Medicaid spending over a decade. “If we win, there are no more excuses,” Rep. Jim Jordan, R-Ohio, chairman of the Republican Study Committee, a coalition of conservative lawmakers, told the L.A. Times recently.

Congressman Paul Ryan (R-Wisc.), the House Budget Chairman and now, Romney’s vice presidential choice, has become a lightning rod over his controversial proposals to reform the nation’s entitlement programs. He proposes sending Medicaid funding to the states to manage in block grants, has proposed changing Medicare for those under the age of 55 by giving people the option to choose a private program instead of traditional Medicare and they would receive money to offset the premium they would have to pay. He has also proposed to raise the Social Security retirement age gradually to 70 years old. His selection as Romney’s running mate will put Medicare, Medicaid and Social Security front and center in the political discussion throughout the election process.

The Republican agenda to cut federal Medicaid money is not going over well among hospitals and medical providers. They worry that the cutbacks could dramatically increase the numbers of the uninsured. Dr. Bruce Siegel, president of the National Association of Public Hospitals and Health Systems calls the GOP push the most serious threat to Medicaid in a decade. Siegel argues that coverage saves lives.

A new Harvard School of Public Health study backs up Siegel’s position. It indicates that residents of states that expand coverage will probably live longer, be healthier and have better access to medical care. Researchers at Harvard, who compared states that voluntarily expanded their Medicaid programs over the last decade with neighboring states that did not, found mortality rates were more than 6 percent lower in states with more generous coverage. Residents of those states were also far less likely to delay needed care because of cost and more likely to report that they were in good health.

The Democrats are planning an unprecedented expansion of Medicaid if they win the White House and control of Congress. The Supreme Court ruling upheld most of the Affordable Care Act, but allowed states to opt out of the law’s plan to enlarge Medicaid. The law directed states to cover those earning up to 133 percent of the federal poverty level, or about $14,800 for individuals and $25,400 for a family of three, and $31,000 for a family of four, far above the levels currently covered by Medicaid in most states.

But the High Court’s decision made that expansion optional for the states. Immediately, several Republican governors said they’d be opting out, including Louisiana’s Bobby Jindal, South Carolina’s Nikki Haley, Rick Scott of Florida and Rick Perry of Texas. These Republican governors say they would not implement an expansion, and await the outcome of presidential and congressional elections to see whether their party will have enough power to repeal the law.

The law provides for the federal government to pay for every new Medicaid enrollee added under the extension, but the states will have to start kicking in a small percentage (10 percent) after a few years. Governors of many states say they’ll have to slash education or other programs, or raise taxes, to cover this. Many governors are also worried that people who didn’t know they have been eligible for Medicaid and possibly other state programs will seek it out because of the publicity and outreach that would surround an expansion.

Texas’s Perry has been the most steadfast against expanding the program, even though it would bring his state between $53 billion and $77 billion in additional federal dollars, according to Patricia Gray, director of research at the University of Houston Law Center Law and Policy Institute. Perry’s argument is that Medicaid is just not a very good program. "Medicaid is a system of inflexible mandates, one-size-fits-all requirements, and wasteful bureaucratic inefficiencies," Perry wrote in a letter to Health and Human Services Secretary Kathleen Sebelius, explaining why he planned to reject the federal government's offered payments. "Medicaid is a failed program," Perry told Fox News. "To expand this program is not unlike adding a thousand people to the Titanic."

The guaranteed coverage reflects the belief by many experts that Medicaid, while imperfect, is best positioned to protect a population unable to buy insurance and increasingly shut out of employer-based coverage as businesses drop or scale back health benefits. Right now, Medicaid and the related Children’s Health Insurance Program (CHIP), covered 68.2 million individuals in 2010. Half of them are poor children. Another quarter covers disabled or elderly.

According to Medicaid’s own numbers, 5.8 million were 65 and older. But while that’s only 8.5 percent of those served, seniors account for 20.7 percent of payments, a cost burden 2.5 times the size of their numbers. In other words, while the average child on Medicaid costs the program about $2,900 a year, the average senior costs more than $16,000, in large part because that covers nursing care and some home care not covered by Medicare.

But Democrats argue that by covering so many people who currently have no coverage, it will relieve pressures on emergency rooms, allows for better coordinated care, particularly of the elderly and disabled, and offers the best chance to control spending and improve care. Advocates for reform argue that in the end, the public pays the bills when people go without regular health care and wait for an emergency to get care – and they say people struggling to make ends meet are almost certainly going to skimp on health insurance. Some of these programs are already underway in many states.

As Republicans see things, overhauling the entire Medicaid program and converting it into block grants to states would reduce federal spending over time and give states the freedom to design their own programs, allowing them to cover whomever they choose. Republicans say the country can’t afford to expand Medicaid. They support a voucher system that would help more people to buy private health insurance.

House Republicans have already voted for a budget plan developed by Rep. Paul Ryan that would cap federal spending growth, but that legislation is not going anywhere in the Democratically-controlled Senate. A group of 47 House Republicans favor an even more severe measure, which would freeze federal Medicaid spending.

What’s unclear is how states could maintain their level of coverage if federal dollars didn’t keep pace with rising medical costs. The nonpartisan Congressional Budget Office concluded last year that states would find this very difficult under the Ryan plan. The CBO suggested that even if the programs’ efficiency were greatly increase, the dramatic cutbacks envisioned by the Ryan plan would mean states would have to reduce eligibility, or provide fewer services, lower payments to payments or increase cost-sharing by beneficiaries, all of which would reduce access to care.

The Romney campaign, which has backed Ryan’s plan, has not provided any details about how the Republican candidate would deal with these tradeoffs.




Thirteen states are moving to cut Medicaid by reducing benefits, paying health providers less or tightening eligibility, according to a recent 50-state Kaiser Health News study published in USA Today. States routinely trim the program as tough times drive up enrollment and costs. But the latest reductions – which follow more extensive cuts last year – threaten to limit access to care for some of its recipients. Most of the cuts went into effect this month, according to the survey.

Illinois, for example, cut enrollees to four prescriptions a month; imposed a co-pay for prescriptions for non-pregnant adults and raised eligibility to eliminate more than 25,000 adults, while Florida cut funding to hospitals that treat Medicaid patients by 5.6 percent, following a 12.5 percent cut a year ago. Alabama, California and Wisconsin have also made cuts while South Dakota, Maryland, Colorado, Connecticut, Louisiana, New Hampshire, Hawaii and Maine also are planning reductions to their programs.

Also contributing to this story were the Los Angeles Times, Kaiser Health News, USA Today, Reuters, AP, NBC News and


Alan Schlein runs, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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